To Have and to Hold…and to File Jointly

April showers bring May flowers, and those flowers are used in the thousands of spring weddings held across the country each year. Every ceremony hallmarks a couple’s love and commitment to each other, and brings together family and friends to celebrate the joining of two families. This past weekend, I was fortunate enough to be a part of my best friend’s wedding.  As high school sweethearts, they have experienced many life events together, including moving across state lines, changing career paths and making big purchases. They’ve also learned the importance of understanding how these events impact their taxes. As I watched them exchange vows, rings, and say “I do”, I started to wonder if they thought about how their marriage could affect their 2019 tax return.

According to the IRS, a taxpayer’s marital status on December 31 determines their status for the entire year. So even if you and your significant other decide to have a New Year’s Eve wedding this winter, the IRS would consider you as married for all of 2019. Fortunately, I’ve listed a few items below that will help make filing your first tax return as a married couple as easy as possible.

• Adjust your withholdings. When filing a joint return, your tax rate and limits for other deductions on your return will change. Some couples might even find themselves in a lower tax bracket after combining their income. Therefore, if you have tax withheld from your paycheck by an employer, update the number of exemptions claimed on your W-4 to ensure that your employer is withholding the appropriate amount of tax.
• From Ms. to Mrs. Not all marriages mean a name change these days, and some marriages even mean a name change for both parties. If either you or your soon-to-be plan to legally change your name, it’s important that you report the change to the Social Security Administration (SSA) and make sure that the names on your tax return match the names the SSA has on file. If they don’t, your refund could be delayed. Bonus Tip: If you’re an international-honeymooner, make sure you update your passport as well as your license. No one wants a headache at customs.
• Can’t live with them, can’t live without them. Most newlyweds move into a larger rental property or decide to purchase a home together, and when you change your address, the IRS needs to know. Make sure you file Form 8822 along with your tax return to report that change. If you are moving to a home you have purchased, make sure you receive a Closing Disclosure Form and keep it in a safe place. This form summarizes the closing transactions and incoming and outgoing funds. This will determine the basis of your new home and what selling expenses you might be able to deduct on your return for the year it was purchased.
• Living happily ever after. Although getting married won’t affect most employer-sponsored retirement accounts, your change in marital status can affect your IRA contributions. Getting married will increase your contribution limitations for both Roth and Traditional IRAs and may allow you to take the full deduction up to your contribution limit on your tax return. If your spouse was not eligible for an IRA account before, getting married can also allow them to make a Spousal IRA Contribution if certain conditions are met.

If you or someone you know is getting married or a newlywed, make sure they are aware of the tax implications of getting married. Please contact your tax professional at Schneider Downs if you want more information about these changes or other tax implications and how they could affect you.